One in three SMEs failed to get desired finance in 2013
Approximately one third of SMEs in Europe failed to get the complete financing package that they had planned for during 2013, according to a recent survey.
The Access to Finance report from the European Commission and European Central Bank also found that 15% of companies saw the issue as a significant problem.
Many companies highlighted that they felt conditions for lending got worse in 2013 with respect to interest rates, collateral and the level of guarantees required. In many cases a general fear of rejection even appeared to be preventing companies from attempting to gain access to new finance.
The highest rates for finance rejection were among micro companies and SMEs who had been active for less than two years, with 10% and 28% respectively reporting issues.
Meanwhile, only 3% of loan applications from large enterprises were rejected, which is causing great concern for smaller companies who are looking to expand.
This is posing a significant obstacle for some SMEs as a lack of finance is resulting in an increased need for corporate restructuring in order to stay trading.
Those who are unable to procure finance via other means and who are short on existing finance are facing administration, which can have serious consequences for the companies concerned.
One option available is that of equity financing, but only 5% of SMEs used such means during the period of the survey, with many admitting they do not feel confident in discussing such means with investors or venture capitalists.
A new programme to combat financial issues for SMEs comes from the Commission in the form of the Competitiveness of Enterprises and SMEs (COSME) programme.
The plan is that the new scheme will provide a guarantee facility for loans up to 150,000 and it is expected that just short of 350,000 EU firms will use the facility by 2020.
This should ease the burden for some SMEs, while it is hoped it will lead to a decrease in the number of firms requiring financial assistance.
By Phil Smith